Landbay: Landlords shifting back to five-year fixed mortgages

by Aaron Strutt

Nov 27 2023

Landbay's latest landlord survey indicates a significant preference towards five-year fixed-rate mortgages among remortgaging landlords.

The survey revealed that 51% of landlords prefer a five-year fixed rate, marking an 11% increase since April and a rebound from 46% in December.

This shift signifies a recovery in popularity for these mortgages, which had diminished following the Liz Truss budget last autumn. Many landlords have had to remortgage at particularly high rates, but thankfully, this trend is starting to reverse. 

Before the budget, 68% of landlords had opted for five-year fixes. In contrast, the preference for two-year fixed rates remains steady at 32%, identical to April's figures but showing an increase from 24% in December.

Additionally, there's a slight uptick in landlords opting for variable tracker rate mortgages, now at 13%, compared to 4% in April, though down from 17% in December. 

Aaron Strutt, product director at Trinity Financial, says: "We are speaking to more landlords keen to refinance to ensure they get the most competitively priced deals. Many do not want to sell up for the moment but want lower rates than their existing lenders offer them."

Buy-to-let rates are improving

Buy-to-let mortgage lenders have been lowering their rates over the last few months, and some competitively priced deals undercut the residential lenders. However, there is a catch. 

CHL Mortgages offers a two-year fixed rate priced around 3.60%, but it has a huge seven per cent arrangement fee, while NatWest for Intermediares has rates around 1% higher with a £3,499 arrangement fee.

BM Solutions has a decent five-year fix priced around 4.3% with a £3,999 fee, although higher rates are priced around 1%.

The most competitively priced buy-to-let mortgages now have hefty arrangement fees, mainly through specialist providers rather than the well-known high street banks.

Is it still hard to remortgage a buy-to-let portfolio? 

It is possible to remortgage a buy-to-let mortgage portfolio, but it can still be a challenging process.

The lenders are keen to issue more buy-to-let mortgages and refinance portfolios but are still very selective. Banks and building societies have different rental stress tests, which means some will offer significantly larger loans than others. They often prefer well-yielding properties at lower loan-to-values. 

There are lower buy-to-let rates with high setup fees mortgages, but landlords often take them because it is their only real option. Our brokers aim to find suitable products with sensible arrangement fees, whether through a more well-known lender, a specialist provider or a private bank.

Call Trinity Financial on 020 7016 0790 to secure a buy-to-let mortgage or book a consultation 

The information contained within was correct at the time of publication but is subject to change

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